Next week is the deadline for the submission of comments on the economic policy paper released by Finance Minister Tito Mboweni in late August.
The paper’s distribution came as something of a surprise – possibly as surprising as the Minister’s penchant for cooking with Lucky Star pilchards. Titled ‘Economic Transformation, Inclusive Growth, and Competitiveness: Towards an Economic Strategy for South Africa’, the paper has certainly stirred a few pots in those kitchens where the ingredients for the country’s economic stew have not changed much for over a generation.
Several of the suggestions in the 75-page document would have left some of Mboweni’s Cabinet colleagues questioning the recipe. For instance, one can only wonder how Trade, Industry and Competition Minister Ebrahim Patel’s taste buds reacted to the proposal that the Industrial Policy Action Plan be rationalised to improve its efficacy.
Likewise, Mineral Resources and Energy Minister Gwede Mantashe was left to chew on this: “In energy planning, the base case of the Integrated Resource Plan should be unconstrained so that all policy options can be compared relative to the least-cost option”. And on this: “Although renewables only contribute around 15% of the energy generated in the US, they provide 67% of the jobs in the energy sector.”
Then there was some added spice for Public Enterprises Minister Pravin Gordhan ahead of the release of his paper on the future structure of Eskom. “Government could take a decision that Eskom should sell coal-fired power stations, possibly through a series of auctions.”
Home Affairs Minister Dr Aaron Motsoaledi was also given some food for thought with the paper’s argument that, to address the skills constraint, immigration regulations should be eased for individuals with tertiary qualifications from accredited institutions.
The growth recipes have also not been to everybody’s taste outside government, with more than a few eyebrows raised across the Tripartite Alliance of the African National Congress (ANC), the South African Communist Party and the Congress of South African Trade Unions. Some of the content is in conflict with ANC policy and the process followed by Mboweni has also been questioned. Some even went so far as to suggest that the Minister has gone ‘rogue’.
Therefore, despite many, especially in business, supporting the paper for being evidence based and pragmatic, it is quite likely that the document will be reined in. Even if it is partially or even mostly rejected, there are still some valuable takeaways, though.
For one, it starts to change the conversation about the political economy and how economic policy is developed. That’s not to say consensus building isn’t still important – it is, particularly given South Africa’s divisive past. Nevertheless, it should not prevent the crafting of a vision that is based on reality, rather than ideological attachment.
Secondly, it reinforces the notion that a State-led growth agenda is no longer feasible. In fact, if there is but one golden thread that runs through the document, it’s that State-led growth can no longer be the go-to proposition it once was, mainly because of the dire state of public finances. Therefore, future economic policy will have to be geared towards ensuring that the private sector takes the lead in reigniting growth.